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Insurance Premium Tax

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What is Insurance Premium Tax (IPT)?

What is Insurance Premium Tax (IPT)?

Insurance Premium Tax (IPT), similar to Value Added Tax (VAT), is a tax applied by the government on insurance premiums. There are two rates of IPT, depending on the type of product covered by the insurance:

1

a standard rate of 12%

2

a higher rate of 20% for

travel insurance

certain insurance when sold with mechanical/electrical appliances

certain insurance when sold with some motor vehicles

Mobile phone insurance is subject to the standard rate of 12 per cent because mobile phones are classified predominantly as a communication device. However, connected device insurance is subject to the higher rate of 20 per cent because tablets and other connected devices are considered ‘electrical domestic appliances’ and not primarily a communication device.

What is the history of IPT?

What is the history of IPT?

IPT was first introduced in 1997 by the UK government to raise additional revenue from the insurance sector. Since then, the standard rate of IPT has tripled:

1 April 1997 – IPT was introduced at 4%

1 July 1999 – IPT was increased to 5%

4 January 2011 – IPT was increased to 6%

1 November 2015 – IPT was increased to 9.5%

1 October 2016 – IPT was increased to 10%

1 June 2017 – IPT was increased to 12%

The higher rate of IPT, since introduced, has always been in line with VAT – currently at 20 per cent.

How does EE display insurance pricing and IPT?

How does EE display insurance pricing and IPT?

To be transparent with our pricing, we split IPT out from the total monthly insurance premiums, so you’re aware how much of what you are paying each month is tax. This also means that if the government ever increases IPT, you’ll be able to see how this increases your total monthly insurance payment.

Mobile phone insurance

Standard pricing

Monthly premium

Insurance Premium Tax

Total monthly insurance payment

Full Cover

£15.00

£1.80

£16.80

Full Cover

£12.50

£1.50

£14.00

Full Cover

£11.00

£1.32

£12.32

Full Cover

£9.00

£1.08

£10.08

Full Cover

£7.00

£0.84

£7.84

Damage Cover

£11.00

£1.32

£12.32

Damage Cover

£9.00

£1.08

£10.08

Damage Cover

£7.00

£0.84

£7.84

Damage Cover

£5.00

£0.60

£5.60

Damage Cover

£3.00

£0.36

£3.36

Connected device (e.g. tablet) insurance

Standard pricing

Monthly premium

Insurance Premium Tax

Total monthly insurance payment

Full Cover

£8.00

£1.60

£9.60

Full Cover

£6.00

£1.20

£7.20

Full Cover

£4.00

£0.80

£4.80

Damage Cover

£6.00

£1.20

£7.20

Damage Cover

£4.00

£0.80

£4.80

Damage Cover

£2.00

£0.40

£2.40

What is a loyalty discount?

What is a loyalty discount?

If you are an existing insurance customer and decide to take insurance again when you upgrade your device, you’ll receive a 10 per cent loyalty discount on your total monthly premium. For example:

Mobile phone insurance

Standard pricing

With 10% loyalty discount

Monthly premium

Insurance Premium Tax

Total monthly insurance payment

Monthly premium

Insurance Premium Tax

Total monthly insurance payment

Full Cover

£15.00

£1.80

£16.80

£13.50

£1.62

£15.12

Full Cover

£12.50

£1.50

£14.00

£11.25

£1.35

£12.60

Full Cover

£11.00

£1.32

£12.32

£9.90

£1.19

£11.09

Full Cover

£9.00

£1.08

£10.08

£8.10

£0.97

£9.07

Full Cover

£7.00

£0.84

£7.84

£6.30

£0.76

£7.06

Damage Cover

£11.00

£1.32

£12.32

£9.90

£1.19

£11.09

Damage Cover

£9.00

£1.08

£10.08

£8.10

£0.97

£9.07

Damage Cover

£7.00

£0.84

£7.84

£6.30

£0.76

£7.06

Damage Cover

£5.00

£0.60

£5.60

£4.50

£0.54

£5.04

Damage Cover

£3.00

£0.36

£3.36

£2.70

£0.32

£3.02

Connected device (e.g. tablet) insurance

Standard pricing

With 10% loyalty discount

Monthly premium

Insurance Premium Tax

Total monthly insurance payment

Monthly premium

Insurance Premium Tax

Total monthly insurance payment

Full Cover

£8.00

£1.60

£9.60

£7.20

£1.44

£8.64

Full Cover

£6.00

£1.20

£7.20

£5.40

£1.08

£6.48

Full Cover

£4.00

£0.80

£4.80

£3.60

£0.72

£4.32

Damage Cover

£6.00

£1.20

£7.20

£5.40

£1.08

£6.48

Damage Cover

£4.00

£0.80

£4.80

£3.60

£0.72

£4.32

Damage Cover

£2.00

£0.40

£2.40

£1.80

£0.36

£2.16

What is a multi-policy discount?

What is a multi-policy discount?

If you have insurance on two or more devices on the same account, you will benefit from a ten per cent multi-policy discount. This is applied to the total monthly insurance payment (premium + IPT). The prices will be the same as above, unless you're a small business customer with ten or more insured devices on the same account.

Can I get a loyalty and multi-policy discount?

Can I get a loyalty and multi-policy discount?

If you’re eligible for both loyalty and multi-policy insurance discounts, the loyalty discount will be applied to your total monthly insurance payment and then the multi-policy discount will be applied to the discounted monthly insurance payment total. For example: